Damas: Back in black
But not for a funeral. The embattled jewelry co is fighting back, and has just announced a (small) profit. So survival looks likely, although there’s a long way to go yet.
December 1, 2010 2:22 by Samuel Potter
The week’s profit figures will come as pleasant news for analysts, given that the company reported in August a full year loss of 1.91 billion dirhams. At about the same time, the company’s own auditors issued warnings over its future. Ernst & Young said, in a letter published on the bourse’s website, “In the event that the financial restructuring plan is not signed as envisaged or the standstill agreement is not extended further, there could be significant uncertainty over the ability of the group to continue operating as a going concern.”
Damas’ own troubles aside, Fakhreddin was right about it being a difficult year in the market, and that holds true for all retailers. And though there are signs of life, retail results are a mixed bag, according to the National this week. The paper reports that Mohammed Alshaya, chairman of MH Alshaya (with brands including Starbucks, H&M and Mothercare) says sales across the company’s 300-plus outlets have fallen year on year. “Sales have grown, but where? Saudi Arabia, Egypt, Lebanon, Kuwait, Abu Dhabi. Bahrain is down, Doha is up, Dubai is down,” he said.
The paper contrasts his comments with those of Mohamed Alabbar, the chairman of Emaar Properties (Dubai Mall owners), who said retail sales were up 33 percent this year. Though he points out that this growth is on woeful figures for 2009. “We’re still going through challenging times, and when we say numbers are up, it is up compared to what? To a low base,” said Alabbar.
It looks like it will be a long, slow slog for Middle East retailers – one which Damas has finally begun.
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